Mattel said it would increase prices for some of its products in the United States to counter higher input costs caused by President Donald Trump’s tariffs.
In an attempt to drive manufacturing to the U.S., Trump implemented 145% tariffs against China. However, Mattel CEO, Ynon Kreiz told CNBC’s Squawk Box that this is unlikely to happen for toys after the company withdrew its annual financial targets.
“We need to remember that a significant part of toy creation happens in America,” he said.
“Design, development, product engineering, brand management all happens in America.
“Making product, producing product in other countries, allows us to create quality products at affordable price points.”
Mattel is also working to diversify its manufacturing to reduce its dependence on China. By the end of the year, Mattel aims to source less than 40% of its products from China, and in two years, have no country that represents more than 25% of its sourcing.
Mattel is also committed to taking mitigating actions to offset costs associated with the trade war, including raising prices in the U.S. while keeping the price of toys low.
According to Roth analyst Eric Handler, the company expects to keep around 40% to 50% of its products below US$20.
The company withdrew its annual earnings forecast, citing uncertainty surrounding Trump’s trade deals. It said it would be difficult to predict consumer spending and U.S. sales for the remainder of the year.
Since tariffs were announced on 2 April, Mattel stock has been down around 19%.
